Can Singapore handle the heat from Chinese bike-sharing startups?

It seems inevitable that Singapore will be the de facto international battle ground for China’s bike-sharing giants. But why?

Having secured large investments from large corporations, China bike-sharing startups are ready to start their overseas expansion in Southeast Asia. Though not very surprising, Mobike and ofo have chosen the island city of Singapore to start their Southeast Asia expansion.

Though Mobike was the first to announce an expansion in Singapore last year, its competitor ofo officially launched in Singapore in mid February – about half a month ahead of Mobike. Hoping to have an edge over its competitors, ofo is now offering riders to rent its bikes at S$0.50 (US$0.35) per ride – half the price offered by Mobike and a local Singaporean competitor, oBike.

Moreover, both Mobike and ofo have investment backings from large companies such as Temasek Holdings, Foxconn and Didi Chuxing. Each company has raised at least a few million dollars for its overseas expansion. With the war waging back home over who will be China’s sole dominant bike-sharing app, how will this fight play out in Singapore?

The upper hand

Unlike China’s population of 1.37 billion people, Singapore has a modest population of 5.61 million people. At about 1/240 of China’s population, three bike-sharing companies seem to be too much for Singapore. In addition, the Singapore government plans to launch its own bike-sharing scheme at the end of the year. With so many companies wanting a slice of the pie, ofo has priced its rentals low to be ahead of the competition, while oBike plans to establish its ubiquitous presence with “tens of thousands” of bicycles by the middle of 2017.

Though China’s two hottest bike-sharing startups have huge investment funds from different investors, Mobike may have the upper hand in the Singapore competition. Temasek Holdings, a Singapore state-owned investment firm that made an undisclosed investment in Mobike last month, is seen as a strategic partner to Mobike’s successful expansion in Singapore. An early setback for ofo came two weeks ago when several ofo bicycles were found illegally parked in a Singapore public park, earning the ire of bike rental shops there. On the other hand, Mobike has started its Singapore operations by having its bicycles available in the central business district.

But why Singapore?

Of all the South-east Asian countries, Singapore is the smallest. However, it has one of the most advanced and convenient transportation networks in the region. Following the footsteps of its counterparts in Paris and New York City, the government has been working on a National Cycling Plan since a few years back. The announcement of new cycling regulations announced by the government earlier this year was also a signal to bike-sharing startups of the government’s support of public cycling. In fact, ofo and oBike have already placed bicycles at most MRT (or subway) stations and public parks in Singapore. The question is, will Singaporeans take this up?

Though there are no hard figures on the number of cyclists in Singapore, it was estimated that there are about 5,000 people cycling every weekend. Some industry insiders and government officials are also confident that cycling in Singapore will continue to grow in the coming years.

Moreover, Singapore is increasingly becoming a gateway for Chinese companies to expand their business operations in Southeast Asia. According to an Asia One report released last year, Singapore-based financial institutions have extensive networks in several Southeast Asian countries, and have been assisting Chinese companies to set up business operations in other parts of Southeast Asia. Singapore’s stable financial environment and strong regulatory framework have also attracted several venture capitalists to set up base, and fund the brightest startups around the region.

All-out war or coexistence?

Unlike the famous well-fought battles like Google and Uber in China, cutthroat competition is uncommon here in Singapore. Rather, companies may have a more ‘natural’ demise as compared to their counterparts entering the China market. One reason could be that Singaporean consumers like the wide variety of choices available in the market. Also Read: Are China’s bike-sharing platforms really part of the sharing economy?

Take ride-hailing apps, for instance. Several people here in Singapore would install both Uber and Grab on their mobile phones. With ride-sharing becoming popular in Singapore, many people will alternate between these two apps, depending on availability, discounts and service preference. This may be a similar situation for bike-sharing apps as well – depending on which services they may be comfortable with, the discounts available, or the availability of the bikes close to their locations.

A resemblance of similar business tactics often used by Chinese companies to fend off competition in China is seen in ofo’s Singapore expansion plan: the availability of ofo bicycles in several public areas and the offering of heavily discounted rental fees.

Moreover, ambitious marketing campaigns in Singapore may not be as economical as those rolled out in larger countries due to Singapore’s small population size.

With most people using buses and trains as the main modes of transport, it remains to be seen if cycling will become widespread in Singaporean culture over the next few years.

Along with Mobike now joining the bike-sharing competition in Singapore, how the competition will unfold is still largely up in the air. Will the Singapore market be receptive to aggressive campaign strategies, or will bike-sharing startups experience equal love from Singapore consumers, and coexist in the same market?

One thing is for sure: three bike-sharing startups might be too much for Singapore to handle.